"Appointing a 'shadow chairman' of the Federal Reserve in advance, making Powell a lame duck in the final stages of his term" - regarding the 'grievances' between USA's Treasury Secretary Basent and the Federal Reserve, this undoubtedly sparked significant external attention during this year's USA election phase.

As one of Trump's closest economic "advisers", Bessent's stance towards the Federal Reserve seems to be somewhat contemptuous and slightly hostile, much like Trump. This is obviously very different from the current U.S. Treasury Secretary Yellen and another previously popular candidate for Trump's 2.0 Treasury Secretary, Waller—these two veteran officials who have served at the Federal Reserve can be considered "allies" of the Federal Reserve.

Interestingly, if one reviews the investment history of the past few years, Bessent may have already had "interactions" with the Federal Reserve: in 2022 regarding the high inflation prediction, Bessent can be said to have "defeated" Federal Reserve Chairman Powell. This may also be one of the reasons why this individual, regarded by Trump as "the smartest person on Wall Street", currently looks down on Powell.

In 2022, Bessent's hedge fund Key Square successfully bet that the Federal Reserve had misjudged the inflation situation, believing that the inflation explosion in the U.S. that year would be more prolonged than the Federal Reserve predicted. Ultimately, Bessent also successfully gained a significant return through contrarian bets against the Federal Reserve.

$S&P 500 Index (.SPX.US)$While it fell over 18% in 2022, Basent's flagship fund at Key Square Capital achieved a remarkable 29% roi that year.

At that time, Bessent's trade betting on rising inflation involved shorting fixed income assets and low-income technology stocks, which were favorites among some new Wall Street elites, including "Cathie Wood". Ultimately, the U.S. CPI data soared to over 9%, a multi-decade high, and did not turn out to be just a "temporary issue" as Federal Reserve officials claimed. Even now, the U.S. CPI has still not fallen back to the Federal Reserve's 2% inflation target.

Best at "winning amidst chaos".

The successful investment experience from two years ago has clearly further enhanced Bessen's reputation as an expert in financial turmoil, with supporters claiming it could be crucial for navigating the economic giant ship driven by Trump.

A person closely associated with Bessen said he is very good at strategic thinking, a global opportunist who excels in chaotic times. "He can employ various financial initiatives to stay ahead... in peaceful times, he might find it more challenging to pinpoint angles to stand out."

The "harvest" of 2022 marked the revival of funds under Bessen, which had previously been criticized for poor performance as his macro investment strategies—like those of other macro funds—struggled to gain an advantage during low interest rate periods.

Last Friday, Trump chose Bessen to lead the USA Department of Treasury, a position that will give Bessen a significant impact on the world's largest economy as well as global markets. His task is to fulfill Trump's promise of tax cuts while mitigating the economic shock brought about by the president-elect's plans to deport millions of immigrants and raise tariffs.

"He has practically seen all the potential issues and possibly more than anyone previously in this role; I think he is a good choice," billionaire investor Druckenmiller stated. Druckenmiller first hired Bessen in 1991 to join Soros Fund Management.

Of course, despite a stellar performance in 2022, some industry insiders also noted that the performance of the funds under Bessen is still far from being top-tier in the industry when considering a longer time frame.

Bessen's Key Square fund reached an asset size of 4.5 billion USD at its peak. However, since 2015, its average annual roi has only been around 5%-9%. It had four profitable years, four loss years, and one year that broke even.

Currently, overall, with investors preparing for a second Trump era, Bessen's nomination as Secretary of Treasury has been welcomed by many on Wall Street. "He is not a loud person," pointed out a former colleague of Bessen. He praised Bessen for maintaining a calm demeanor during a crisis, "Clearly, this is very helpful for him in this position."

In a letter to clients written in January this year, Bessemer outlined his views on Trump. He wrote that the new president "wants to create an economic explosion and make what he might call 'the greatest four years in American history'." Bessemer also promoted Trump's cheap energy supply plan while downplaying his tariff threats.

Bessemer wrote, "Tariff guns are always loaded and placed on the table, but they are rarely fired."

Editor/rice